November2024 - BTC | How Miniscript Outperforms MultiSig

Miniscript Vs MultiSig

You can no longer make a 2D table. but: it’s no longer true that reducing “vulnerability to loss” increases the “vulnerability to theft” and viceversa. That’s an inherent tradeoff with multisig, but doesn’t apply to miniscript wallets, where you can add other recovery options.

Main thing is miniscript supports timeouts. So losing a private key just means you have to wait.

Miniscript not only provides more security but does so while reducing the risk of key loss or policy failure. This flexibility, combined with cost-effectiveness, ensures that Miniscript is a far superior alternative to traditional multisig setups. In short, Miniscript isn’t just an incremental improvement—it’s a paradigm shift in Bitcoin custody solutions.

How Miniscript Outshines

Granular Control Beyond Simple Multisig

1. Multisig setups like 2-of-3 enforce a rigid structure: you need 2 keys to unlock funds, and that’s it.
2. Miniscript, on the other hand, allows the creation of highly flexible spending conditions. For example, you can combine policies like:
   • A 2-of-3 for day-to-day use.
   • A time-locked fallback to a single key after 90 days (e.g., for recovery).
   • A 3-of-3 for highly critical situations (e.g., unanimous consent).

Why this matters: You can achieve both higher security and lower risk of loss, as Miniscript eliminates “one-size-fits-all” trade-offs that come with traditional multisig.

Risk Mitigation Through Custom Conditions

1. Multisig doesn’t natively account for nuanced scenarios like deadlock resolution or key loss.
2. Miniscript, however, can handle complex conditions seamlessly:
   • A keyholder loses access to their key? The script can allow funds to be recovered with remaining keys after a time delay.
   • All keyholders unavailable? A third-party “backup key” could be granted access after extended time locks.

Why this matters: Miniscript significantly reduces the risk of funds becoming irrecoverable, which has been a persistent problem in multisig-only setups.

Composability of Policies

1. Multisig is a single policy: “m-of-n.” That’s it.
2. Miniscript allows you to compose policies together. For example:
   • “2-of-3 during normal operations AND 1-of-1 emergency recovery after 6 months.”

Why this matters: This composability lets you layer multiple types of security, combining the strengths of multisig with time locks, fallback conditions, and even more.

Efficiency Gains

1. Traditional multisig setups grow in complexity and cost as you increase the number of participants or keys. For example:
   • A 5-of-7 multisig is more expensive to verify and settle than smaller ones.
2. Miniscript compiles all these flexible conditions into optimized Bitcoin scripts, keeping fees lower and execution faster.

Improved Auditability

1. Miniscript allows for standardized policies that are much easier to audit and verify than custom raw scripts or basic multisig setups.This makes it especially valuable for institutional setups (e.g., enterprise wallets like the one you’re building), where transparency and compliance are paramount.